What is a Proforma Invoice? When and Why Use It?

January 15, 2024

Find out what is a proforma invoice, why and when to use it, and the difference between proforma invoices and regular invoices. Discover what information a proforma contains and more in our proforma invoice guide.

James Fyfe
Co-founder - CEO

Two People Creating a Proforma Invoice

Every business needs to send invoices for the goods and services they provide. That's why they need to use a Proforma Invoice to outline the costs and other details of the transaction for the client's consideration. 

This post will explain what a Proforma Invoice is, why you use it, and when it's used.

What is a Proforma Invoice?

A Proforma Invoice is a document that outlines the costs of goods or services being sold from one business to another. It usually includes purchased items, quantities, prices, and relevant taxes or shipping charges. It provides a more detailed description of goods or services sold and their cost.

The pro forma invoice is typically sent out before the goods and services are delivered. It serves both parties by providing an opportunity for a pricing agreement before exchanging anything or sending out the final sales invoice. 

The document also acts as proof of a contract between the two businesses. It's therefore important for every business owner to know how to write a sales invoice, after both parties have agreed on the proforma invoice terms and costs.

When to Use a Proforma Invoice

The followings are situations when a proforma invoice should be used:

Advance Payment or Deposit

A seller should use a proforma invoice when requesting payment for a large or "bulk" order. This document must ensure that the buyer understands and agrees to the purchase's cost, quantity, and terms. It can also act as an agreement between both parties, providing legal protection in case of a dispute.

Shipping and Customs Clearance
Shipping of Packages

Before a shipment is sent overseas, the seller must provide a proforma invoice to the buyer. This document can assist in obtaining necessary export permits from local authorities and is also used by customs agents to classify commercial invoices for sales or tax invoices.

Obtaining Financing or Credit
N.D.A on Financing or Credit Terms Example

Many suppliers require issuing an official proforma invoice when granting credit terms. This document provides a detailed description of the goods or services being purchased and assures that payment will be received in due course.

Banks and other financial institutions usually accept an official invoice as proof of purchase when granting loans or providing credit.

Invoicing Foreign Customers

When selling goods to customers abroad, suppliers must provide a detailed proforma invoice that meets the requirements of the invoicing software of the buyer's country.

Therefore, proforma invoices often play a critical role in international business today, helping to ensure that goods are paid for and delivered according to the final invoice.

Why do Businesses Use Proforma Invoices?

Proforma Invoice Templates

If you are wondering what is a proforma invoice used for, then keep reading to find out its many use cases.

Pro forma invoices are an essential tool for businesses when negotiating a sale.

The following reasons explain why companies prefer to use proforma invoices in their sales process:

Provides a Detailed Description of the Goods or Services Being Sold

An official invoice outlines the exact details of the goods or services sold.

This ensures that both buyer and seller agree on what is being purchased and that all parties expect the same delivery.

Acts as a Preliminary Agreement Between Buyer and Seller
Legally Binding Agreement

When both parties agree on the sale details, a proforma invoice ensures that both parties have formalized and accepted the agreement.

This helps to minimize any potential disputes that might arise in the future.

Customs Clearance and Shipping Documentation

A proforma invoice can provide customs officials and shipping companies with the necessary documents to complete their clearance procedures.

This helps to ensure that goods move quickly and efficiently through the supply chain.

Proforma invoices can facilitate the sale process and ensure a smooth transaction.

What Information Does a Proforma Invoice Contain?

There is no difference between proforma and commercial invoices; they typically contain the same information as a regular commercial invoice which includes:

  1. Seller's and buyer's name and contact information
  2. Description of goods or services being sold
  3. Quantity and unit price of goods or services
  4. Accounts payable
  5. Payment terms and conditions
  6. Shipping costs
  7. Incoterms (such as FOB, CIF, etc.)
  8. Any applicable taxes or duties
  9. The date of the invoice and the validity period of the offer.
  10. The invoice number/proforma invoice number

How does a Proforma Invoice Differ from an Invoice?

An invoice is an official sale record, while a proforma invoice is typically used as a preliminary bill of sale before providing the goods or services.

The Information on an invoice includes the customer's name, item descriptions, quantity, the total amount due, and payment terms.

A proforma invoice consists of the same information as an invoice but is not necessarily a record of a completed sale. Instead, it is an estimate or quote for goods or services that have yet to be provided.

A proforma invoice can help ensure both parties are clear on what is requested and expected from the transaction. It can also help clarify any questions regarding payment terms, delivery timelines, or other details related to the sale.

Invoicing can be time-consuming, but automating it with a tool like Portant will ensure you get rid of the repetitive process of issuing invoices.  

Portant's Google Sheets invoice template can make it easier to generate a proforma invoice. You can get started in minutes and send invoices in batches, so you can focus on other aspects of your business.

Portant's Google Sheets Invoice Template

Automating your invoicing process with Portant's automation workflow can help you save time and ensure all the necessary details are accurate and up-to-date.

Using this template, you can quickly generate an invoice for your customers that includes all the required information to request payment promptly. This template is ideal for small to large-sized businesses needing a straightforward way to create invoices and keep track of outstanding payments.

You can easily create customized proforma invoices, ensuring all the necessary information is included to help facilitate swift payment.

By automating this process with Portant, you can save time and ensure your customers receive the documentation they need quickly.


Proforma invoices are crucial documents used in the sales process. They confirm that both parties agree on what is purchased, can be used for customs clearance and shipping documentation, and contain specific Information about the goods or services sold.

Automating your proforma invoice process with Portant's Google Sheets invoice template allows you to quickly generate invoices, helping you save time and ensure all the details are accurate.

With this tool, you can easily create custom proforma invoices and provide your customers receive the documentation they need on time.

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